I've put together a Letter to the Editor of my local paper, drawn mostly from the SS site plus various bits and pieces from other places.
I've already had a private response from an acquaintance who's something of an Anarchic Libertarian nut-case. :) He denies the existence of the SS Trust Fund, because it consists mostly of "IOUs".
I would like some rational input covering any errors, misstatements, or poor framing. So feel free to whack away at it. No guarantee that I'll take any/or all suggestions, but I am interested in what you have to say. Letter begins below the fold.
Some basic information about Social Security.
- The real name is: FICA. The Federal INSURANCE Contributions Act.
- "It's your money". Of course it is. It's just like "your" money that you spend on home insurance or car insurance.
- "It's a pension plan". Not really. It's an insurance plan that provides a number of benefits including retirement benefits to retired workers and their dependents (70% of all beneficiaries), disabled workers and their dependents (16%), survivors of deceased workers (14%)
In other words, Social Security is all about Family Values. It wasn't created for personal gain. It provides a safety net for families. For example, almost 3 in 10 of today's 20 year olds will become disabled before reaching age 67. What happens to them if they haven't accumulated enough personal resources to pay the bills?
- "It's a ponzi scheme because current worker's contributions pay for current benefits". Just like any insurance program, current benefits are paid by current premiums. And, that will ALWAYS be the case. There is no "day of reckoning" unless the world ends -- in which case it really won't matter if you don't receive your benefit.
- "We're only talking about diverting 2% of the contribution to private accounts". Fun with numbers. That's 2% out of the 6+% of a worker's contribution - or 1/3rd of that contribution (over 30%) or 1/6 of the total employer plus employee contribution (15%). That 15% reduction in contributions will BRING a crisis.
- "There is a Social Security crisis". Perhaps in forty years, IF NOTHING IS ADJUSTED, but that's not a good reason to undercut the insurance program now. Just raising the income cap on contributions could eliminate that possibility 40 years down the line.
- "It's a bad investment because it only returns about 2%". Typically higher rates of return are paid when the RISK of losing money is higher. Social Security funds are invested in the safest investments on the planet - United States Government Bonds and Treasury notes.
- Who would benefit from privatization? The biggest beneficiaries would be stock brokers and fund managers. They get paid whether your investment increases in value or decreases in value. Those charges have been estimated to be more than 10 times the administrative costs of the current system.
- Currently more than 53% of the workforce has no private pension coverage. If private investment is so good, why don't more people have the discipline to invest in their, and their families, future? And remember, there's more to Social Security than just a pension.
Privatization of this insurance program will produce an immediate shortfall in money available for current beneficiaries, as well as reduce the funds available to the government for defense, highways, education, and health. It will deplete the funds available for benefits in the future.
This well-intentioned concept will actually undermine family security and pits potential personal gain against such important moral values as care and concern for all. Surely there are better ways to safeguard this important insurance program.
Get the facts for yourself at http://www.ssa.gov/pressoffice/basicfact.htm
Ken Wildman
419 N. Johnson St.
Ada, Ohio